On June 17, 2020, the Financial Conduct Authority fined Commerzbank AG’s London Branch £37,805,400 ($47.4 million) for failing to take reasonable steps to effectively implement its anti-money laundering systems and controls program from October 2012 to September 2017. The FCA identified deficiencies in the bank’s AML control framework such as the failure to conduct timely periodic due diligence resulting in a backlog of know-your-client checks, with a significant number of clients working under an exception to the banks rules near the end of 2016. Furthermore, the FCA determined that the bank’s automated tool used for monitoring money laundering transactions was missing 40 high-risk countries and 1,110 high-risk clients in 2015, and there was no process for terminating a relationship with an existing client for financial crime risk.
According to the Final Notice, Commerzbank breached Principle 3 of the FCA’s Principles for Businesses, that requires firms to have adequate risk management systems in place. FCA also noted that the bank was aware of existing deficiencies and failed to take steps to fix the problems despite FCA warnings in 2012, 2015 and 2017. In addition to its findings related to deficiencies, the FCA also explained that the bank has recently taken significant steps to voluntarily bring its AML controls into compliance, and therefore, qualified for a 30% discount on its fine for resolving this matter at any early stage of the investigation.